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Navigating Uncharted Waters: Launching New Zealand's First Search Fund

Luke Taylor, CEO of SSS IT Security Specialists

Chief Executive Officer

Key Takeaways

  • Luke Taylor, a former military officer and maritime tour operator, successfully completed a search fund journey in New Zealand, acquiring a cybersecurity business.

  • With a background in the military, Luke emphasizes the grounding and authenticity gained through military experiences, which contribute to effective leadership and decision-making in civilian life.

  • As a case study for the emerging search fund ecosystem in New Zealand, Luke encourages prospective searchers in the country to consider the opportunities and benefits of the search fund model.

Luke Taylor, a seasoned leader with a diverse background, embarked on a successful search fund investment journey in New Zealand, culminating in the acquisition of Scientific Software and Systems Limited (SSS), a prominent cybersecurity company. Before venturing into entrepreneurship, Luke's professional journey began in the military, where he honed his leadership skills and navigated challenging environments.

Following his military career, Luke transitioned to the maritime tourism sector, working for one of New Zealand's largest tourism companies. His roles included operations management, where he oversaw the smooth functioning of complex operations involving ships, buses, and large-scale customer experiences. This experience provided him with valuable insights into customer service, an aspect he considers pivotal in both tourism and the IT services industry.

In the search fund process, Luke demonstrated a strategic and targeted approach, focusing on personalized interactions with potential businesses rather than adopting mass outreach campaigns. His ability to navigate the nuances of the New Zealand market, characterized by its smaller size, showcased his adaptability and determination throughout the search process.

Navigating Search Funds and ETA in New Zealand

Luke Taylor's entry into the realm of search funds was not a conventional approach. Unlike most MBA programs in more established markets, New Zealand institutions didn't cover Entrepreneurship Through Acquisition (ETA) concepts as extensively. ETA is the path to acquisition entrepreneurship by buying and growing an established small business, which is precisely what Luke's company Scientific Software and Systems Limited (SSS) specialises in. Instead of the classroom, he learned more about ETA after a brief encounter with an Australian investor who was part of a startup community in the Wellington area. He began researching extensively during the pandemic lockdowns of 2020, connecting with searchers globally to understand the nuances of the model.

Convinced of the potential in New Zealand, Luke not only embraced the traditional search fund model but also became the country's first to overtly declare his intent to run one. This marked the beginning of his journey into the world of search funds.

When naming his search fund, he chose "Acheron Capital." Drawing inspiration from his Navy background, Luke connected the name to HMS Acheron, the first ship to survey New Zealand waters, and the Acheron River near his upbringing. Despite the trade-off of frequently correcting its pronunciation, the name held a nostalgic throwback to the first ship that explored New Zealand, aligning with Luke's role as the pioneer searcher in the country.

Overcoming Investor Hurdles: Struggles and Triumphs in Introducing Search Funds to New Zealand's Market

Luke's journey into expanding the ETA approach in an underdeveloped market brought forth many challenges, specifically with winning the trust of local investors. Putting forward the significance of realistic timelines and international investor support, Luke's insights are pivotal for nurturing a thriving search fund ecosystem.

His unique strategic investor approach involved targeting 12 high net-worth individuals with backgrounds ranging from family offices to local funds and individuals. Luke's approach focused on staying close to the Harvard-Stanford ETA systems commonly found in more developed markets while also changing guidelines in order to "meet New Zealand legislation and corporate structures and tax structures."

SSS's journey into receiving investments faced a healthy amount of scepticism - particularly from international investors. As Luke mentions:

“Is this market big enough to sustain a search, which requires a certain degree of quantity in order to be able to get through that search journey? So that was an element. And then the other side is also that most investors, most international investors will want to see that you have strong local support for a search fund and that requires you to bring local investors into your fund.”

Shaping Leadership through Military Tenure

Luke Taylor's military background has left a permanent mark on his leadership style. A 13-year journey within the military not only reflects his resilience but also contributes significantly to his adaptability in both military and civilian applications. Luke shared insights into the stark differences between an extended military tenure and the corporate world's transitions. The difficulty of finding a landing spot to learn the commercial side of leadership was noticeable with the absence of extensive corporate acumen compared to his corporate peers.

When probed about lessons from his military service, Luke referred to it as a 13-year apprenticeship in leadership and people management. The military's focus on small team dynamics and accountability, even in unfavouring environments directly translated into his tenacity for buying and building small businesses, which he has started up multiple with his wife after his time in the Navy.

Luke attributed his groundedness to early exposure to leadership roles and accountability in stressful and adverse environments. The military's testing grounds allowed for a deep understanding of handling adversity, a skill that seamlessly translated into his civilian leadership roles.

“You're not looking for opportunities to be comfortable because you're never in a comfortable space to start off with… And so if I look at my role as a chief executive now, there's definitely environments where I think, you know, this is uncomfortable, but the team are looking to me, and so I have to take a deep breath and get through it” — Luke Taylor

Navigating Transition: Military to Tourism Leadership

Luke Taylor's move from the military to New Zealand's tourism industry showcased his adaptability and leadership evolution. Joining one of the country's major tourism firms, Taylor seamlessly shifted into operations management, leveraging the company's familiarity with ex-Navy staff.

Reflecting on his tourism experience, Taylor emphasized the universal nature of customer service, a principle he has carried into his current role in IT services. With parallels between tourism and IT services, he highlighted the shared goal of exceeding client expectations. Time spent in customer-facing roles before launching SSS helped Luke tremendously when dealing with international clientele during his business search. It was noted that while there is a need for an industry-agnostic stance when launching a new venture in a growing market, Luke favoured a personalized outreach; focusing on mass campaigns for individual interactions which worked in his favour.

Strategic Insights for New Market Investments

As a veteran in educating and presenting a novel market to investors, Taylor delves into lessons learned, most notably the need for realistic timeframes for raising local capital. Drawing from his own experience, he highlights the extended duration it takes to secure local funding, especially without a robust deal background compared to his peers from private equity. Acknowledging the challenges, Taylor advises prospective search fund model organizers to ensure due diligence by allowing ample time for meaningful conversations with potential investors, emphasizing that understanding the intricacies of a search fund model often requires multiple interactions.


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